Wells Fargo Loses First Round of Eminent Domain Battle Carole VanSickle | September 23, 2013 | 2 Comments Wells Fargo recently lost a preemptive lawsuit designed to avert the seizure of underwater homes using eminent domain in Richmond, California. The city is still moving forward with the plan. Saying that the ruling was, “as we say in the trade, a no-brainer,” U.S. District Court senior judge Charles Breyer threw out Wells Fargo’s case against the city of Richmond, California, last week. Breyer ruled that since the city had not actually gone through with its plans to seize underwater mortgages via the power of eminent domain at the present time, the lender’s suit was premature. “Ripeness of these claims does not rest on contingent future events certain to occur but rather on future events that may never occur,” he added[1]. Richmond’s city council has said that it will begin seriously investigating its options for seizing underwater homes and then reselling them to their owners at “market value,” effectively forcing the owners of the notes on the properties to take a loss regardless of whether the notes are performing or not and whether the investor would prefer to modify the loan or go through with a foreclosure if the loan is delinquent. Although many are viewing this ruling as a triumph for advocates of the eminent domain seizures, the real issue is timing. Once a property has been seized, Wells Fargo or other lenders can certainly protest the seizure as unconstitutional. The lawyer for the city of Richmond said in response to the ruling that the lender would certainly have been aware of the likely outcome before filing the suit and that he believes “the only purpose [of the lawsuit] would seem to be to intimidate or pressure legislators.” Richmond officials sent letters to 32 mortgage companies in July offering to purchase more than 600 mortgages for less than market value and including the possibility of an eminent domain seizure if the companies refused to sell[2]. The city insists that these letters were negotiations, not threats. Do you think that the judge ruled correctly? What do you think about Richmond’s “negotiations” with lenders?
Posted on: Wed, 25 Sep 2013 02:04:54 +0000
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